By Dinesh Nair and David French
Three state-owned Gulf firms are considering a joint bid for a minority stake in Occidental Petroleum Corp's Middle East and North Africa (MENA) unit, a deal that could be worth between $8 billion and $10 billion, three banking sources said.
Abu Dhabi's Mubadala Development Co, Qatar Petroleum and Oman Oil Co have formed a consortium and have picked Citigroup to advise them, the sources with knowledge of the matter said on Monday. They spoke on condition of anonymity as the information is not public.
Occidental, the fourth-largest U.S. oil company, said in October it planned to sell a minority stake in its MENA operations as part of a restructuring meant to lift its valuation. On Monday, two of the sources said it could sell a 40 percent stake to the three Gulf firms.
Occidental and Qatar Petroleum were not immediately available for comment, while Citi and Mubadala declined to comment. Oman Oil could not be reached for comment.
Occidental's planned sale fits a trend of U.S. oil companies disposing of assets elsewhere in the world in order to tilt strategy towards the shale gas boom in North America.
ConocoPhillips is offloading assets in Kazakhstan, Algeria and Nigeria in deals generating around $9 billion in total.
The proposal from the Gulf marks a rare three-way collaboration between state-owned energy firms. One of the stumbling blocks to any deal will be how the trio overcome political hurdles to managing its acquisition, one of the sources said.
Among the positives - given the cost associated with buying the stake on offer, it is unlikely that other bidders will emerge to challenge them.
"The stake is pretty big for a single buyer. It was always a deal which made sense for a consortium to look at but this is not a done deal yet and there are several dynamics to it which needs to be addressed," the source, a Gulf-based banker, said.
"We don't see much international interest for an asset like this and the chances of another consortium being formed are limited but not impossible."
The Middle East accounts for more than a third of Occidental's worldwide oil and gas production with net developed and undeveloped oil and gas assets in the region totaling more than 15 million acres, according to its website.
Among its assets are the Al Hosn Gas Project in the United Arab Emirates, one of the largest natural gas fields in the region which it is developing in a joint venture with Abu Dhabi National Oil Company.
The firm also has assets in Qatar, Oman, Bahrain, Iraq, Yemen and Libya.
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